Musk Faces Conundrum in Dealing With Trump’s White HouseMusk Faces Conundrum in Dealing With Trump’s White House

Donald Trump’s second inauguration will launch a test of the influence of Tesla CEO Elon Musk, who needs to sell more battery-electric vehicles while the incoming president intends to make good on his promise to end federal subsidies of BEVs.

Musk, a major supporter of Trump, used his pop-culture cachet, $250 million-plus in cash, and his social media platform, X, to help defeat Democrat Kamala Harris last November and is preparing to reshape the federal government and particularly its role in regulating the auto industry.

The Tesla CEO’s relationship with Trump has grown even more prominent since the election as the president-elect put Musk in charge of an unchartered Department of Government Efficiency to find ways to cut federal spending.

Musk, the world’s richest man, is likely to benefit from his ties to Trump, including relaxed oversight of his FSD (Full Self-Driving) technology, which NHTSA has blamed for hundreds of crashes. He is seeking fewer barriers to his new robotaxi business and is building a shield for Tesla’s critical ties to China while curbing government subsidies and tax breaks for rivals such as General Motors and Ford.

While Trump and Republicans, at least rhetorically, remain hostile to BEV mandates, the GOP-led House of Representatives recently gave Musk a green light to expand Tesla’s business in China.

Even as Trump and the GOP threaten a trade war with China and ask American companies to curb their investment in China, one of Tesla’s most important suppliers, CATL, now faces potential sanctions over ties to the Chinese military, according to the U.S. Department of Defense.

Meanwhile, Tesla’s dominance in the global BEV market could use some help as the company’s sales dropped 1.5% in 2024. It was the first drop in sales in years by Tesla, which set the pace for the global BEV industry for more than a decade. At the same time, sales of the highly touted Cybertruck faltered and additional products were slow in coming.

Other automakers are busy lobbying Trump as Musk looks for ways to help Trump trim as much as $1 trillion from the federal budget.

Ford CEO Jim Farley says both he and Executive Chairman Bill Ford have spoken directly with Trump, reminding him of the automaker’s critical role in the U.S. economy. Ford employs more workers, produces more cars and trucks, and exports more vehicles than any other automaker in the U.S.

Musk, meanwhile, makes a significant profit as global automakers such as Stellantis purchase credits from Tesla’s BEVs to meet their obligations to reduce emissions. If Trump changes the rules, as promised, Tesla will lose critical money generated by the sales of credits, though it will continue to sell them in the European Union.

Using his X media platform, Musk is also embroiled in politics in Europe with frequent attacks on the U.K. Labor government and in Germany with his endorsement of the right-wing AfD party.

At times, Musk’s political attacks appear to run counter to his own best interests. In Germany, AfD is stridently anti-immigrant while his gigafactory outside Berlin depends on a multi-ethnic workforce with employees from Turkey, Syria and other parts of the Middle East as well as Poland and West Africa.

In the U.S., the conflict between Musk and the Republican Party over issues such as China and BEV policy appears unresolved. MAGA celebrities such as Steve Bannon have been highly critical of Musk since the Tesla CEO voiced support for the H-1B visa program allowing highly skilled immigrants to work on BEVs, automated vehicles and AI as engineers.

The New Year’s Day fire in a Tesla Cybertruck in Las Vegas (pictured, below) at first was thought to be a terrorist attack aimed at Trump and Musk.

But the fire in the driveway of the Trump Hotel was not a terrorist attack. Instead, a U.S. Army sergeant and avid Trump supporter, who had texted friends about how he loved the Cybertruck before fatally shooting himself and blowing up the truck, appears to have been suffering from post-traumatic stress from his two deployments to Afghanistan.

Instead, it could serve as a metaphor for Musk’s jumbled relationship with Trump.

Burned Cybertruck outside Trump hotel in Las Vegas.